Nearly half of high net-worth individuals say they have planned ahead for health care and long-term care costs in retirement, but only a small fraction, 18 percent, said their financial plan accounted for their parents’ long-term care costs.
In “Insights on Wealth and Worth,” a survey of 711 high net-worth individuals by U.S. Trust, only one-quarter of Baby Boomers and 16 percent of those over age 68 said they expected their parents to turn to them for financial assistance in the future, yet one-third of Generation X and 46 percent of Generation Y said they expect to provide financial assistance to their parents or in-laws at some point in their lives.
Fifty-six percent of those surveyed said they provide financial support to their adult children and 46 percent said they have provided substantial financial support to adult family members other than their own spouse or partner.
The report also found that wealthy people feel more financially secure than other groups so they have shifted their investment priorities from asset protection to asset growth.
“The majority of people we surveyed grew up in middle-class families and created their own wealth. They don’t see themselves as wealthy and many are unaware of risks and circumstances that grow increasingly complex as wealth accumulates,” said Keith Banks, president of U.S. Trust.
“The wealthy have been disciplined about protecting their assets from market loss, but may have a false sense of financial security. They are not adequately planning for family health concerns or for the retirement that they want. We need to shift the conversation about wealth management to these important topics and expand their understanding of risk.”
Eighty-eight percent of those surveyed said they feel financially secure now and 48 percent said they feel even more financially secure today than they did five years ago. Women, Generation X and households on the highest tier of the high net worth segment were all concerned about having enough income in retirement.
When it comes to retirement planning, 62 percent of high net worth households said they were confident they would have sufficient income in retirement and six in 10 non-retirees have been calculating their retirement income by reviewing expected distributions from retirement savings accounts.
A large percentage had not adequately accounted for the impact of inflation, taxes on their investment income, life expectancy, the cost of long-term care or any financial support that might be needed by their children or parents.
U.S. Trust, Bank of America Private Wealth Management is a private wealth management organization.